The Positives
+ Stable Optus mobile revenue. Mobile revenue was unchanged at A$2.74bn. Blended ARPU managed to rise 6% YoY to A$31. This offset a 4.5% YoY decline in subscribers to 9.97mn. Prepaid ARPU suffered the most with a 12% decline due to fewer inbound travellers and foreign students.
+ Bharti remained the bright spot. Operating profits for Bharti in India and Africa surged 74% YoY in 2H21 to S$541mn. Revenue expanded from higher ARPUs and subscribers. However, underlying profit contributions were negated by high finance costs of S$420mn. Singtel’s 31.7% stake in Bharti Airtel is worth S$16.6bn, marked to market.
The Negatives
– Hat trick* cost of S$1.2bn. On 14 May, Singtel announced impairment charges for intangible assets and goodwill for Amobee (S$589mn) and Trustwave (S$336mn). Adding in a S$195mn impairment for Amobee last year and liquidation of Hooq (S$68mn), its acquisition-cum-digital adventure cost at least S$1.18bn over two years, excluding operating losses. Management mentioned that without partners, it is unable to scale up faster.
– Final dividend slashed. Final DPS was cut 56% YoY to 2.4 cents (2H20: 5.45cents). Full-year DPS was 7.5 cents or S$1.23bn, down 39% from the 12.25 cents or S$2.0bn in FY20. This represents a 71% payout of underlying net profits. Guided payout for FY22e is 60-80% (Figure 1). Associate dividends (net of withholding tax) in FY21 were S$1.29bn (FY20: S$1.29mn).
Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.
He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.